Family finances, individualisation, spending patterns and access to credit

The Journal of Socio-Economics 37 (2008) 577–591

Family finances, individualisation, spendingpatterns and access to credit

Jan Pahl ∗School of Social Policy, Sociology and Social Research, Cornwallis NE, University of Kent,

Canterbury, Kent CT2 7NF, UK

Accepted 1 December 2006

Abstract

This paper presents and discusses empirical data suggesting that couples in the United Kingdom andelsewhere are becoming more individualised in their financial arrangements. Data on access to credit, andspending responsibilities, are used to explore the implications of individualisation. It is suggested that, thougha couple’s decision to keep their money separate may be motivated by a desire for equality and autonomy, theeffect in some households may be to create inequality between the partners. The use of credit cards, which areessentially an individualised form of money, can privilege those with good credit ratings and disadvantagethose who have less access to new forms of money. Finally, a wider view of the topic is explored, usingevidence on the intra-household economy, on spending patterns and access to credit in sub-Saharan Africa,a part of the world with a long tradition of ‘separate pots’ for married couples. The article concludes thatmany of the issues in sub-Saharan Africa also apply in the ‘developed’ world.© 2007 Elsevier Inc. All rights reserved.

JEL classification: D

Keywords: Intra-household economy; Individualisation; Gender; Spending; Credit

Recent research has suggested that couples in the United Kingdom may be becoming moreindividualised in their financial arrangements. Though pooling money in a joint account remainsthe most common form of money management, fewer couples are pooling their incomes and moreare keeping all or part of their incomes in individual accounts to which their partner does not haveaccess. The new individualised approach to money seems to apply particularly to younger and

∗ Tel.: +44 1227 827563.E-mail address: [email protected]: www.kent.ac.uk/sspssr/staff/pahl.

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578 J. Pahl / The Journal of Socio-Economics 37 (2008) 577–591

more affluent couples, especially before they have children, but it may represent a more lastingchange in norms and values with regard to couple finances (Pahl, 2005; Vogler et al., 2006).

At the same time the electronic economy, and a variety of new forms of money, are developingat great speed. Cash and cheques are used less than they used to be, and credit and debit cards muchmore often. These ‘new forms of money’ are essentially individualised. They enable individualsin couples to conceal spending from each other or to maintain a higher standard of living than theirpartners. They also allow people to borrow without collateral, to even out the variations in theirspending patterns, and to carry money conveniently and safely round the world. However, thereare clear patterns of exclusion from the electronic economy, which reflect education, income,employment status, gender and age. Those who are ‘credit rich’ tend also to be ‘education rich’,‘information rich’ and ‘work rich’, while those who are ‘credit poor’ tend also to be ‘educationpoor’, ‘information poor’ and ‘work poor’ (Pahl, 1999).

In the developing world the coming of micro-credit and other financial services has led to agrowth of interest in the intra-household economy. It has become clear that the financial servicessector has to understand financial arrangements within households if credit and other financialservices are to be delivered effectively. Research on the intra-household economy has underlinedthe great variety of ways in which couples and households manage their money. Assumptionsabout family finances developed in Europe and North America may not apply in other parts of theworld. So the paper ends by examining intra-household money management, patterns of spending,and access to credit in sub-Saharan Africa, a part of the world with a long tradition of ‘separatepurses’ for married couples.

However, these topics raise many questions. If couples do not pool all their money, but retainindividual control of all or part of their incomes, what does that mean for the welfare of individualswithin the household? The electronic economy has increased the use of credit cards enormously:who uses them and what are the implications if some individuals within households have greateraccess to credit than others? And what can we learn from patterns of money management in partsof the world where the individualisation of couple finances is well established? The aim of thispaper is to explore these questions.

1. Individualisation and family change

Beck has argued that individualisation is associated with the dis-embedding of the ways of lifeassociated with industrial society and the re-embedding of new patterns in which individuals mustproduce their biographies for themselves. He associated this change with developments in welfarestates in advanced industrial societies and in particular with changes in the education system, thelabour market, the housing market and so on. Each individual has become responsible for his orher own path through the welfare state and the labour market (Beck, 1997). The argument wassummed up by Beck and Beck-Gersheim (1995, p. 6).

Individualisation means that men and women are released from the gender roles prescribedby industrial society for life in the nuclear family. At the same time, and this aggravatesthe situation, they find themselves forced, under pain of material disadvantage, to build upa life of their own by way of the labour market, training and mobility, and if need be topursue this at the cost of their commitments to family, relations and friends.

In the late 20th century many feminists argued for individualisation and for changes whichwould enable women to support themselves financially, as a basis for full participation in societyand equality within the household. The feminist literature warned of the dangers of a welfare

J. Pahl / The Journal of Socio-Economics 37 (2008) 577–591 579

state based on the idea of the household unit headed by a male breadwinner (see, for example,Lewis, 2001a, 2003; Lister, 2003). It was suggested that women’s financial dependence within thehousehold, far from protecting them, actually made them more vulnerable to poverty and disad-vantage (Glendinning and Millar, 1992). Increasingly welfare rights in the UK became individualrights. Some benefits are still means tested on a household basis, but others are individually based,especially those related to employment and pensions. The taxation system has been individualisedand increasingly individuals are expected to make provision for their own standard of living inold age.

The move towards individualisation is taking place in parallel with, and perhaps in associationwith, changes in marriage and the family. The growth of cohabitation, and the increase in rela-tionship breakdown and divorce, have contributed to a situation in which women, in particular,cannot look to marriage as a source of financial security in the way that the founders of the welfarestate envisaged (Lewis, 2001b). At the same time the increase in women’s employment, and theavailability of income maintenance for lone parents, has freed women from complete financialdependence on men. The enjoyment which many women feel in having their own money to spend,and their reluctance to be financially dependent on a man, reflects the positive side of the worldwhich they have created (Diaz, 2002; Nyman and Reinikainen, 2002). But there may also be risks,as we shall see.

This is the context in which individuals and couples may be increasingly opting for the inde-pendent management of money. Financial services and products have always been based on theidea of the individual consumer, rather than the couple or the household. Bauman (1995, p. 5) hassuggested that,

Modernity extolled the delay of gratification, in the hope that the gratification will still begratifying when the delay is over; the post-modern world . . . preaches delay of payment.If the savings book was the epitome of modern life, the credit card is the paradigm of thepost-modern one.

2. The individualisation of couple finances

We turn now to evidence about changes in family finances. The British Household Panel Survey(BHPS) documented changes in patterns of money management from 1991 to 1995. Respondentswere asked, “People organise their finances in different ways. Which of the methods on this cardcomes closest to the way you organise yours? It does not have to fit exactly—just chose the nearestone. You can just tell me which letter applies.

A. I look after all the household money except my partner’s spending money.B. My partner looks after all the household’s money except my personal spending money.C. I am given a housekeeping allowance. My partner looks after the rest of the money.D. My partner is given a housekeeping allowance. I look after the rest of the money.E. We share and manage our household finances jointly.F. We keep our finances completely separate”.

The results of the BHPS survey of 1995 showed that, in general, around half of all couples saidthat they shared their money and managed their finances jointly, a third opted for the ‘whole wagesystem’ (options A and B), while only 3% of couples chose the option ‘We keep our financescompletely separate’ (Laurie and Gershuny, 2000). Further analyses of the BPHS data suggested


that keeping finances separate was more common among younger and more affluent households,especially where women were high earners (Rake and Jayatilaka, 2002).

The BHPS set of options does not allow for the situation when couples pool some of theirmoney and manage the pool jointly, while keeping some money completely separate. This systemhas been described as ‘partial pooling’ (Pahl, 2005; Vogler et al., 2006). In this article the term‘independent management’ is used for two different but related patterns of money management.The two systems, which have been explored by Vogler et al. (2006) are:

• The ‘partial pool’ in which couples pool some of their money to pay for collective expenditureand keep the rest separate to spend as their choose.

• The ‘independent management’ system in which both partners have their own independentincome which they keep separate, each having responsibility for different items of householdexpenditure.

It might be argued that conflating partial pooling and independent management of money ismisleading. However, both express an essential individualism. If couples do not pool their moneyor maintain a common kitty, this is often because one or both want to maintain a degree ofautonomy or privacy in their money management practices. The classic rationale is, ‘How cananyone give their partner a present if it has to be paid for from a joint account?’ They may agreeto have a common kitty for collective spending, such as mortgage payments and utility bills, asystem which would be defined here as partial pooling, or they may decide to keep their incomescompletely separate and allocate collective bills to one partner or another. In both cases the aimis to protect some individual spending and a key issue is how much money each partner retainsunder his or her control.

An example of partial pooling is shown in Fig. 1.The example is of a couple, Sarah and Simon, both of whom have been married before. It

shows how their banking arrangements can be seen as a map of their relationship and of theirfinancial commitments. Both have their own incomes, though Simon earns considerably morethan Sarah. Both pay money into joint accounts for day-to-day spending and longer term saving,but both have their own individual accounts, for their own spending and saving, while Simon alsohas major financial commitments to his ex-wife and children, who live elsewhere. This exampleshows how much bank accounts can reveal about relationships, family commitments and so on:they are an under-used source of data.

My study in the late 1990s examined the impact of new forms of money, such as credit and debitcards, telephone and internet banking (Pahl, 1999). The methods included quantitative analysesof the 1996 Family Expenditure Survey (FES), qualitative research with focus groups, involving59 individuals all living in couples and face-to-face interviews with 40 couples (Pahl, 1999). Theresults showed that partial pooling or independent management of money were used by 28 out ofthe 99 couples involved in the qualitative part of the study. For greater convenience the term ‘inde-pendent management of money’ will be used to include partial pooling. The analysis showed thatindependent management was particularly characteristic of younger couples, cohabiting couples,those without children and those where the woman was in full time paid work (Pahl, 2005).

Recent analyses of data from the International Social Survey Programme (ISSP), whichincludes teams from 38 countries, have found similar patterns with a larger data set (Vogler,2005; Vogler et al., 2006). The British ISSP is based on a nationally representative sample ofindividuals over 18. The analysis reported here is concerned with the 1994 and 2002 samples andwith the men and women who were living in married or opposite-sex cohabiting relationships.


Fig. 1. Banking arrangements as a map of family relationships.

The ISSP data showed that, while over half of couples continued to pool their money, 13% usedpartial pooling in 1994 and 17% in 2002. Respondents reporting independent management ofmoney made up 9% of the sample in 1994 and 10% in 2002. Income, employment status, maritalstatus and ideologies of breadwinning were all significant predictors of systems of money man-agement. The two systems in which money was kept partly or totally separate were more likelyto be used by couples in which female partners were in professional/managerial or intermediateclass positions and male partners were under rather than over 35 (Vogler et al., 2006; see alsoElizabeth, 2001; Burgoyne and Morison, 1997; Woolley, 2000) (Table 1).

A move towards separateness in couple finances was also found in a recent study of bankingpractices. In 2004 the Alliance and Leicester Bank contacted a representative sample of 1001British couples, either married or cohabiting. The results showed that 34% of those who tookpart in the survey managed their finances though a joint account, while 38% had both joint andindividual accounts. However, 28% of couples maintained totally separate financial arrangements.The motives for separation in couple finances varied between women and men. More than fourout of five women who did not have a joint account said that they saw this as a way to maintaintheir independence. Just under one-quarter of men and one in eight women had their own accounts


Table 1Changes in patterns of allocation of money within households

Allocative system BHPS 1995 ISSP

1994 2002

Female whole wage 36 14 10Houskeeping allowance 10 10 8Joint pooling (shared management) 51 54 55Partial pooling – 13 17Independent management 3 9 10

Refs. Laurie and Gershuny (2000) and Vogler et al. (2006).

in order to avoid arguments: 21% of men in this group feared that their partner might dip intoa joint account without them knowing, something which only 8% of women thought was a risk(Alliance and Leicester, 2004).

Lewis (2001b) examined money management among the 61 couples she interviewed for herstudy, The End of Marriage. She found a higher degree of independence in money managementamong the younger couples, compared with the older couples, and among cohabiting as opposedto married couples. However, she argued that independence in money management was primarilyabout making sure that each partner had some personal and private spending money. Arrangementsfor other areas of spending often involved a complex mix of different bank accounts, with moneybeing moved between them in a way that reflected joint decisions. Lewis (2001b, p. 165) arguedthat independent management of money could be associated with joint control.

3. Credit cards and the impact of the electronic economy

Credit cards are essentially an individualised medium for managing and spending money.Though a married couple may have a card which both use, there will always be a main cardholder, who is responsible for paying the bill, and a second holder. The purchases of the secondholder will be known to the main card holder, who can preserve secrecy about what was boughtwith the card if she/he wants to do so. So the growth in credit card use may be one driver for theindividualisation of couple finances.

In my study of new forms of money the Family Expenditure Survey offered an opportunityfor examining the use of credit cards among a large and representative sample of the Britishpopulation. The data used came from the FES for 1996, in which year interviews took placein about 7000 households, of whom 3676 contained married couples. The overall response ratewas 70% (Office of National Statistics, 1996). Information was collected about the income andout-goings of the household as a whole, and in addition each ‘spender’ was asked to com-plete an expenditure diary over a 2 week period. Respondents were asked to note in the diaryevery single item which they have bought, and to record if a credit card was used to make thepurchase.

Discussion in the focus groups had suggested that two aspects of employment were particularlyrelevant to whether or not people used credit cards. These were, first, the employment status ofwomen, with a distinction being made between full time, part time and no employment, and, sec-ondly, the employment status of the household, with a distinction being made between ‘work rich’and ‘work poor’ households. In order to examine the effects of these two aspects of employment, avariable was created which combined the employment situations of both the man and the woman.


Table 2Percentages of individuals using a credit card to make a purchase by household employment categories

Household employment categories Credit card used to make a purchase

Men Women Significance (P<)

Percentage N Percentage N

Both full time 42 350 41 349 nsFull time/part time 42 356 35 304 0.085Full time/no paid job 37 256 25 170 0.001Woman main earner 24 66 23 63 nsBoth retired 21 174 14 119 0.003Both unemployed 6 9 7 12 ns

All 33 1221 28 1017

Total number = 3676 couples. Ref. Pahl (1999).

This involved re-coding the employment variables given by the FES to make six broad HouseholdEmployment Categories. (For further information about the categories see Pahl and Opit, 2000.)The categorisation involved taking account of the employment status of both partners, so that thesample was divided between six different ‘household employment categories’:

• both employed full time;• husband employed full time, wife employed part time husband employed full time, wife not in

paid work;• wife main earner (husband may be retired or disabled);• both retired;• both unemployed.

Table 2 shows the percentage of men and women in each employment category who had useda credit card to make a purchase during the 2 weeks when they were filling in the expenditurediaries. The statistical significance of each line of the table was tested using a Chi-squared test,with N being the total number of households with expenditure on the item in the 2 week period.

Table 2 suggests that between one-quarter and one-third of all those who took part in the surveyused a credit card over the 2 week period, with men being more likely than women to have used acard. Gender differences in the use of credit cards were associated with differences in employmentstatus. When the man and the woman were both in full time employment they were equally likelyto have used a credit card. However, women in part time employment were less likely, and womenwithout employment very significantly less likely to have used a credit card, by comparison withtheir employed husbands.

The table highlights the exclusion of unemployed people from the credit card economy, withonly a very few individuals in this category using a credit card during the 2 weeks. This isconsonant with research on access to credit more generally, which has shown that low incomehouseholds find it hard to obtain credit; if they have to borrow they tend to be forced to contact moreexpensive sources of money than the typical credit card company (Rowlingson, 1994; Rowlingsonand Kempson, 1994). The poor pay more for many things, but arguably the extra they pay forcredit puts the greatest strain on their budgets (Collard and Kempson, 2005).

Retired people were the other group which appeared to be relatively excluded from the creditcard economy. This may partly be a result of low income and lack of credit worthiness. But it may


also be a consequence of a lack of financial confidence in new forms of money and of a generalmistrust of getting into debt. There was a significant difference between men and women amongretired couples, which may reflect differences in income, a lack of confidence by women in usingnew technologies or a tradition of male dominance in financial matters. It may be that for somecouples the retirement of the man is associated with a handover of power to him from the woman,in an attempt to compensate him for his loss of earning power?

4. Gender and spending responsibilities

However, the access which individuals have to household finances depends not only on earningsand on how finances are managed, but also on spending priorities and responsibilities. Withinhouseholds there are conventions about who should pay which bills and buy which items. Theseconventions may reflect wider social norms, or they may simply have developed as the membersof the household negotiated the patterns of their life together. This issue was examined in mystudy of new forms of money, again using data from the FES for 1996.

Table 3 is based on the 3676 couples and on the expenditure diaries which they kept over a2 week period. The expenditure categories in the table were selected because they representedsignificant elements in most household budgets, with the two largest categories being spending onfood and motor vehicles, which represented on average 16 and 11% of the total amount recordedin the diaries. The items were also chosen because they were unlikely to have been paid by directdebit or standing order; in other words all spending was likely to have appeared in the expenditurediaries (Pahl, 2000).

Table 3 presents women’s expenditure on particular items as a percentage of total expenditureby the household on that item. It suggests that patterns of spending were highly gendered. Womenspent more than men on food, women’s and children’s clothes, childcare and educational courses.Men spent more than women on alcohol, motor vehicles, repairs to the house, meals out, gamblingand holidays. The balance between men and women in spending was more even when it came

Table 3Women’s expenditure on particular items as a percentage of total household expenditure on that item (N = 3676)

Percentage of total spent by women

Women’s clothes 90Children’s clothes 85Food 80Child care/school expenses 78

Medical/dental expenses 59Household goods 51Tobacco 43Recreation 42Men’s clothes 40

Holidays 36Gambling 35Meals out 34Repairs to house 33Motor vehicles 31Alcohol 27

Ref. Pahl (2000).


to household goods, medical and dental expenses, tobacco and recreation. Rather surprisingly,perhaps, women were responsible for two-fifths of the amount spent on men’s clothes.

The gendering of spending does not matter if all the money coming into the household ispooled in a joint account to which both partners have access. However, it may be a very differentstory if the partners keep their finances separately and there is no expectation of sharing, eitherin income or spending. When household finances are managed independently, both partners mayenjoy a sense of autonomy and personal freedom, so long as their incomes are broadly equivalent.However, motherhood is often accompanied by a drop in a woman’s income (Sharmista, 2005). Ifthis happens to a woman, while at the same time her outgoings increase, because she is expectedto pay the costs of children, the situation may change.

The crux of the matter is that children can never be fully individualised, in the sense that theycannot support themselves as autonomous individuals in the labour market. This implies thatwhoever is responsible for children has to carry their costs for them, unless children are supportedby the state in their own right. If the couple do not adapt their money management practices,they may find that one partner is much better off financially than the other. Otherwise, despiteall the aspirations towards equality in relationships, gender inequalities in earnings and genderdifferences in spending priorities may mean that in certain circumstances individualisation incouple finances is a route to inequality.

There is now a wealth of evidence, from the UK and elsewhere, to show that money whichis earned, or controlled, by mothers is more likely to be spent on children than money earnedby fathers. In other words if the policy aim is to enhance the living standards of children, thenfinancial resources should be targeted on women rather than men (Pahl, 1989; Ermisch, 2003, p.49; Lundberg et al., 1997; Phipps and Burton, 1998).

A related issue concerns saving and spending on pensions. Re-analysis of the BHPS for 1995showed that in general women were less likely to save from their current earnings than men, areflection of their smaller incomes (Rake and Jayatilaka, 2002). Though women were more likelyto have some savings in their own names than men, the amounts they saved were smaller, exceptamong low income households. These findings add to a growing literature on the difficulty whichsaving for their pensions poses for women (Ginn, 2003; Peggs, 2000; Mayhew, 2003). Women’sresponsibility for their children may mitigate against them acquiring adequate pensions in theirown right: when the choice is between saving for a distant future or paying today for child care orchildren’s shoes and clothes, pension payments are not likely to be a priority. It would be interestingto know whether assets and the amounts being saved for retirement in couple households differaccording to the ways in which couples manage their finances. Does independent management ofmoney make it harder for women to save?

Up to this point we have been concerned mainly with the UK. How does the situation therecompare with what happens in other parts of the world? Patterns of money management withinhouseholds have been shown to express strongly held norms, values and ideologies (Pahl, 2001;Singh, 1997; Vogler, 1998; Zelizer, 1994, 2005). So it might be expected that in different societiescouples would adopt very different approaches to money management. What does this mean to theaccess which individuals have to resources and to their spending responsibilities? Can researchcarried out elsewhere cast light on the situation in the UK?

5. Family finances in sub-Saharan Africa

Over the past 20 years there has been a wealth of research on the intra-household economy incountries outside Europe and North America, carried out mainly by economists and anthropolo-


gists. Most of these studies begin by acknowledging that traditionally social science has taken thehousehold as the unit for analysis and that this continues to be a powerful approach in explainingmany phenomena. They then go on to challenge the unitary model of the household, arguing thatfinancial arrangements within households vary enormously, both within and between societies.

Generalising very broadly, over much of Asia the extended family or clan is the more pertinentboundary of domestic money; in India, for example, the Hindu Undivided Family is a legal con-struct which is officially recognised as a financial unit for tax purposes. In many such householdsthere is a common fund, often administered by a senior woman; though individuals may keepcontrol over a part of their incomes this is often a subject of dispute. By contrast, over much ofsub-Saharan Africa, the ‘separate pot’ system of money management is more common than the‘shared pot’ (Singh, 2005; Standing, 1991; Blumberg, 1991). The following section draws largelyon research studies from sub-Saharan Africa and uses this data to see what can be learnt fromlooking within the intra-household economy. In considering challenges to the unitary model ofhousehold finances, I shall draw especially on work by Bolt and Bird (2003).

A key issue concerns the labelling of the money which enters the household and the challengethis poses to the idea of the ‘fungibility’ of money. The varieties of social meanings which can beattached to money from different sources have been illuminated by Zelizer (1995, 2005). In myown study of money and marriage the income from a person’s main job was identified as being forthe family and for collective consumption, while income from second jobs or work on the side wasmore likely to be spent on individual priorities or personal interests (Pahl, 1989). A study in theCote d’Ivoire identified a sharp distinction between money coming from three different activities.The three activities were the cultivation of yams, which was seen as being under the controlof the household head for re-distribution to the entire household, cultivation for sale, either bymen or women, and cultivation for subsistence, which was typically under the control of women(Duflo and Udry, 2003). The researchers examined the impact on living standards of fluctuationsin rainfall. They showed that rainfall that increased the output of yams was associated with shiftsin consumption towards education, staples and food. Rainfall that increased the output of cashcrops was associated with increased spending on adult and prestige goods, while increases in theoutput of subsistence crops were associated with increases in food consumption (Duflo and Udry,2003, p. 31).

The second challenge is to recognise that different members of households may have differ-ent spending priorities. We have to move away from models of the household which emphasisesharing, altruism and cooperation, to models which include the possibility of negotiation, bargain-ing and even conflict. Many studies have shown that there is a positive association between theamounts of money controlled by women and the amount the household spends on food, women’sand children’s clothing and child care expenses; money controlled by men is more likely to bespent on tobacco and alcohol. This was the key finding of an important, cross-national study car-ried out in households in Bangladesh, Indonesia, Ethiopia and South Africa by Quisumbing andMaluccio (2000) (see also Piesse and Simister, 2003). This may explain why the lower incomesof female-headed households, by comparison with male-headed households, were not necessarilytranslated into higher levels of malnutrition. The study by Kennedy and Haddad in Malawi foundthat female-headed households spent between 25 and 50% less than their male counterparts; how-ever, levels of malnutrition were lower (Kennedy and Haddad, 1994; see also Piesse and Simister,2003).

A third challenge is to recognise that what goes on within households is affected by the widersociety in which the household is located. We need to move from seeing the household as abounded unit towards a view that stresses its permeability and its links with wider social and


economic structures. This is particularly relevant with the development of the money economyand the growth of financial services. There is currently great interest in the use of micro-creditprogrammes in developing countries. The term ‘micro-credit’ refers to programmes that providecredit for self-employment and business services, typically for poor people. Many take the form ofrotating savings and credit activities (ROSCAs), which are similar to Credit Unions, but are oftentargeted at women. They have been hailed as way to address a variety of different goals, includingthe relief of poverty, the empowerment of women and the creation of financial sustainability.In December 2004 it was estimated that world wide around 92 million people were clients ofmicro-credit institutions (Micro-Credit Campaign, 2005).

Seven micro-credit schemes in the Cameroons were studied by Mayoux (2001). She showedthat the impact of the schemes was limited by pre-existing norms about property. In agriculturepowerful networks of local leaders and male family members enforced customary laws which onlygave women rights of access to land through their husband’s or father’s lineage. Women wereforbidden to plant permanent trees on kinship land and this effectively excluded them from owningand marketing the main cash crops: coffee, cocoa, rubber and palm oil. In recent years women’saccess to land has further decreased because of a complex combination of increasing populationpressure, land reform giving formal land titles to men, and declining commodity prices whichhave led men to increase the area under cash crops in order to maintain their incomes (Mayoux,2001, p. 449). All these factors limited the benefits which women could gain from membershipof a ROSCA.

The fourth challenge is to recognise the enormous variability in household composition andstructure, both within and between societies, as well as over time (Bolt and Bird, 2003, p. 10). Manyhouseholds in developing countries are much more complex than those assumed in European andNorth American research on this issue. Some may contain three generations or be polygamous; insome countries it may be normal to send children to live with better-off relatives, while in othersthe death of one or both parents may mean that children are brought up by their grandparentsor other relatives. In addition, a great variety of individual characteristics impact on the accesswhich individuals have to the resources entering households. As well as gender, these include ageand birth order, marital status, relationship to household head, illness, disability and incapacityand so on (Bolt and Bird, 2003, p. 10). So, for example, in polygamous households less favouredwives and their children may receive less than their share of household resources and may be atrisk of increased morbidity and mortality (Bird and Shinyekwa, 2003).

Assuming that the household is a harmonious financial unit can also be a misleading basis onwhich to make policy. Some of the issues involved were outlined by Haddad et al. (1997) andQuisumbing and Maluccio (2000) and the following section draws on their work. There are fourways in which policy changes may fail to achieve what was intended.

First, targeting transfers on the household may not result in the desired consequences, iftransfers directed to the husband or the wife have different impacts. The effect of transfers ofmoney may differ, depending on the identity of the income recipient. Investment in a child withinthe household may depend not only on the gender of the person receiving the income or the transfer,but also on the gender of the child. For example, Duflo (2003) study in South Africa showed thatpensions received by women had an impact on the weight and height of their granddaughters,but that the same effect did not apply to boys. On the other hand, Haddad and Hoddinott (1994)found that in the Cote d’Ivoire increasing the cash income to women significantly increased theirsons’ height-for-age relative to that of their daughters.

Secondly, attempts to improve family living standards by encouraging the use of credit maymisfire if there is not a good understanding of social and economic processes within the household.


For example, in the study of micro-credit schemes in the Cameroons, the assumption was madethat the basic household unit would consist of a husband, his wife and their children and that withinthe household there would be agreement on financial decisions. In some instances only one loanwas allowed per household, which disadvantaged junior wives in polygamous households, whilethe rule that a woman had to get her husband’s signature before receiving a loan disadvantagedwomen whose husbands did not want them to be more financially independent (Mayoux, 2001,p. 450).

Third, directing information at the household, and assuming that it will be shared, may meanthat the intended recipient does not even find out about the policy. The report on the Micro-CreditCampaign (2005) makes it clear that lack of information is one of the main obstacles to access toaffordable credit. This may be because individuals are not told by the household head about creditopportunities, or are discouraged from applying. But it may also be because people are unclearabout what is involved in applying or take on credit obligations which they cannot repay. Similarfailures of information may apply in the case of cash transfers.

Fourthly, and more generally, the unitary model predicts that changes in incomes and pricesare the most effective ways to change household behaviour. In reality a range of policies can beused to affect household allocation outcomes, such as changes in access to common property,to resources and credit, or changes in legal and institutional rights (Quisumbing and Maluccio,2000, p. 7). A study of ROSCAs in Kenya showed how local norms about trust affected theaccess which individuals had to this form of credit (Johnson, 2004). Out of the 24 householdswhich took part in the study, 15 of the couples managed their money independently; only 3said that they pooled resources, while in most of the rest the men controlled finances, leavingtheir wives to ask for money when necessary. A number of different sources of loans wereavailable, with ROSCAs being the most commonly used. However, while two-thirds of thewomen who took part in the study used a ROSCA, this applied to less than one-third of themen, who were more likely to borrow money from friends and relatives. This gender differ-ence was explained in terms of men’s more individualistic culture: they did not like the strictrules involved in membership of a ROSCA, did not want to discuss their financial problemswith the group and feared that other members would default on contributions to the com-mon fund. Many examples were given of men’s ROSCAs which had failed (Johnson, 2004,p. 1368).

6. Conclusions

Many of the issues which came up in the literature on sub-Saharan Africa are also relevantin the developed world. The individualisation of couple finances means that the household can-not be regarded as a single economic unit. There may be variations between individuals withinhouseholds, in terms of their spending priorities and their standards of living. Spending pat-terns are highly gendered, with women being more likely than men to spend on children andon collective goods. The coming of the electronic economy, exemplified in this article by creditcards, has created a new set of filters which influence the access which individuals have toresources.

At the same time demographic changes mean that households in the UK and elsewhere arebecoming more complex, and that they are becoming more permeable in terms of flows ofmoney. The children living in one household may have parents who live elsewhere, but yet whoshare the costs of their upkeep. When parents divorce, the grandparent generation may continueto contribute financially to the costs of their grandchildren, whose main support may now be


their step-parents. All these changes make the control and management of family monies morecomplex.

Many of the policy issues which exist in the developing world apply too in more ‘developed’countries. Money transfers can have unintended consequences, as was the case with InvalidityBenefit in the UK, which became a form of early retirement payment. Debates about who shouldbe the recipient of particular benefits continue, most recently in the UKin the case of Working TaxCredit and the Child Tax Credit. Information is a key issue, as has been underlined by recent workon financial exclusion (Collard et al., 2001; Kempson et al., 2000). But information is not onlyanswer, as current debates about whether and how people should save for their pensions makesclear.

This brief overview of a complex field has underlined the point that every couple has to find abalance between being a financial unit and being two separate, financially autonomous individuals.If they live together there will be some common bills to be paid, but at the same time they arelikely to retain control over some money, if only for their own personal spending. They also haveto find a way of managing their money which fits the legal framework within which the householdeconomy is located and the ideologies, both social and familial, which surround them. It seemsthat we are seeing a general move towards individualisation in family finances, a pattern whichglobally is probably more prevalent than it is in the UK. It will be important to continue to examinethe implications for individuals of the changes taking place in the ways in which couples controland manage their finances.

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Documents

Family finances, individualisation, spending patterns and access to credit